Bank Stock Prices Research Articles

Money laundering, media and European banks

PurposeThis paper aims to assess, from an empirical perspective, the research question if public media reports which relate concrete banks to concrete allegations of money laundering have an adverse impact on banks stock prices and what are the drivers of such impact?Design/methodology/approachThe paper makes use of event study methodology and uses the constant mean and the market model. The event window is calibrated towards a five-day window, and the estimation window has a length of 90 days, in line with best academic practices. Drivers are identified by correlation analysis. and the market model uses ordinary least squares regression.FindingsThe application of event study methodologies yields the results that stock prices of affected banks generate, at the date of the news appearance, statistically significant negative abnormal returns under both the market model and the constant mean model. As negative abnormal returns have been mainly found at the date of the event itself, the findings confirm that the impacts of money laundering may be severe but short natured. In addition, the paper finds that the identified negative abnormal returns may be driven by the banks’ size in terms of total assets, by the bank’s profitability in terms of return on assets and by the bank’s sustainability risk.Practical implicationsThe findings have implications in terms of banking and supervisory practices. In specific, the findings help to argue that banking consolidation is needed to lower the impacts of AML cases, as stock prices of larger banks show less sensitivity. In addition, the findings could be used to determine financial sanctions against banks violating AML regulation. Finally, the findings imply that AML news can have severe and fast-moving financial stability considerations and are, therefore, important in crisis situations.Originality/valueAs there appears to be no substantial research that applies event study methodology to the money laundering context, the combination of research question and methodology has an innovative character. In addition, there is no clear literature on media and money laundering.

PENGARUH ROA, ROE DAN NPM TERHADAP HARGA SAHAM (STUDI PADA PERUSAHAAN PERBANKAN YANG TERDAFTAR DI BEI PADA MASA PENDEMI COVID 19 PERIODE 2019-2021)

The purpose of this study is to determine the effect of return on assets (ROA), return on equity (ROE), net profit margin (NPM) and on banking stock prices in Indonesia during 2019-2021. The population in this study are 33 banking companies listed on the Indonesia Stock Exchange (IDX) for 2019-2021. The sampling technique uses saturated sampling techniques so that 33 banking companies are obtained. The research method used in this study is a quantitative research method. Data analysis techniques were carried out using classical assumption tests which included normality tests, multicollinearity tests, heteroscedasticity tests and autocorrelation tests. While hypothesis testing is done by multiple regression analysis. The results of this study indicate that the ROA variable has a partial effect on stock prices as evidenced by a significant value of 0.013 <0.05. For the ROE variable, it has no partial effect on stock prices as evidenced by a significant value of 0.860 > 0.05. While the NPM variable has no partial effect on stock prices, it is proven that the significant value is 0.350 > 0.05. For the independent variables Return On Assets (ROA), Return On Equity (ROE) and Net Profit Margin (NPM) affect the dependent variable on stock prices by 9.9%. Simultaneously all ROA, ROE and NPM variables have a significant effect on stock prices.

The Impact of Accounting Measurement of Financial Instruments at Fair Value on Stock Prices Changes for Banks: an Empirical Study on Companies Listed on Iraqi Stock Exchange

Purpose: The aim of this study is to examine is the relationship between the accounting measurement of financial instruments at fair value and changes in stock prices for banks listed on the Iraqi Stock Exchange. The study aims to determine whether there is a relationship between the fair value measurement of financial instruments and changes in stock prices and, if so, to what extent this relationship exists. The study may also aim to identify any factors that may influence this relationship and to provide insights and recommendations for stakeholders, such as investors, regulators, and financial institutions. Theoretical framework: The theoretical framework for the study may be based on financial reporting theory, which suggests that the financial statements of a company should provide information that is useful for decision-making by stakeholders. This may include information on the company's financial performance, financial position, and cash flows. The accounting measurement of financial instruments at fair value may have a significant impact on the stock prices of banks listed on the Iraqi Stock Exchange. Banks that adopt fair value accounting for financial instruments may experience more volatility in their stock prices compared to banks that do not use this method. Design/ Methodology: A qualitative methodology is used in the study. Given the specifics of the topic at hand, and in an effort to provide a solution and test certain hypotheses, the theoretical research relied on a descriptive method, discussing relevant studies and theoretical literature to examine the many ideas and aspects of fair value measurement. Findings: The study's findings could contribute to the existing literature on the impact of fair value accounting on stock prices and provide further insight into the subject. The results of the study could be used to inform future research on this topic, including the development of new models or hypotheses. The study's findings could be used by banks listed on the Iraqi Stock Exchange to assess the potential impact of adopting fair value accounting for financial instruments on their stock price. The study's findings could be used by regulators and policy makers to assess the impact of fair value accounting on stock prices and the stability of the financial system. Implication: This study can serve as a useful resource for anyone who wants to study the changes of stock market in Iraq and it is relationship with the accounting measurements of the financial instruments, also it would be very essential to be checked by the stakeholders, such as investors, regulators, and financial institutions, who are interested in the stock market of Iraq. Originality/value: The originality/value of an empirical study on the impact of accounting measurement of financial instruments at fair value on stock prices changes for banks listed on the Iraqi Stock Exchange could lie in its contribution to the understanding of the specific effects of fair value accounting on stock prices in the Iraqi banking sector. This is an understudied area, as previous research on the topic has largely focused on other countries or regions.

The resilience of Islamic banking efficiency in the face of the Covid-19 epidemic

Purpose - Since 2020, the COVID-19 pandemic has harmed the Efficiency Islamic banking industry. This study examines the effects of the COVID-19 pandemic on 33 Islamic stock-traded banks in Asia.Method - This study includes public financial statements and stock prices of Islamic banks in Asia. This study compares peer-to-peer of how the Covid-19 pandemic affect 33 Islamic financial institutions in 2019 and 2020. A dummy-covid separated pre-pandemic and post-pandemic periods and bank efficiency was a dependent variable. Least-squares panel data regression, fixed-effects, and random-effects models determine model parameters.Result - This panel regression analysis shows that Islamic banking's usefulness changed after the Covid-19 pandemic. Islamic financial institutions performed better than usual during the pandemic. The analysis results show this clearly.Implication - Islamic banking appears relatively unaffected by the current economic downturn. The Islamic banking sector, which differs from its conventional counterpart in that it is based on the principle of profit sharing, will fare better during economic contractions, according to these findings.Originality - This is the first study to use a cross-country sample of Islamic banks in Asia to analyze the efficiency of Islamic banking during COVID-19.

Assessing the financial and informational role of supervisory stress tests: EU-wide 2018 stress test vis-à-vis EU-wide 2021 stress test

PurposeThe supervisory stress test evaluates the capital adequacy and profit-generation capacity of systemic banking institutions under baseline and adverse macroeconomic scenarios. This study aims to assess the financial and informational role of European stress tests and substantiate the impact of their disclosures by examining the EU-wide 2018 stress test vis-à-vis the EU-wide 2021 stress test in terms of how and to what extent the stock prices of the stress-tested banks have been affected.Design/methodology/approachThis study applies standard event study methodologies to evaluate the reactions of market participants during the EU-wide 2018 and 2021 stress test exercises. We examine several “large” events in both the exercises for a selected sample of European banks.FindingsThe results of our event study analysis show that the EU-wide 2018 and 2021 stress tests come subsequent to considerable abnormal price movements. The announcement of stress test results triggered tangible investor reactions, indicating the informational value of stress tests in reducing bank opacity. This supervisory “toolkit” is considered extremely important, as it provides meaningful insights to the supervisors of the banking institutions and the market stakeholders by improving the transparency of the financial sector, allowing them to segregate banks more effectively.Originality/valueThis study constitutes one of the earliest attempts to shed light on the financial and information role of the European supervisory stress tests by comparing the EU-wide 2018 and the EU-wide 2021 stress test exercises. Moreover, it provides concrete empirical evidence and qualitative analysis to explore certain aspects of the European and US stress tests.

PENGARUH PROFITABILITAS, PRICE TO BOOK VALUE, BOOK VALUE PER SHARE TERHADAP HARGA SAHAM PERUSAHAAN PERBANKAN

Composite Stock Price Index (JCI) during 2017-2020 has increased due to the increasing number of investors and also reflected in the high stock prices of banks. Increase of the Bank stock price is result of investor purchases influenced by supply and demand. Study based on data of banking companies listed on the Indonesia Stock Exchange (IDX). There are nine bank stocks on the Indonesia Stock Exchange (IDX) 80 index used as a sample in this study, The Sample is selected using saturation sampling. This study aims to determine the effect of Return on Equity (ROE), Price to Book Value (PBV), and Book Value Per Share (BVPS) on stock pricesin bankingcompanies at IDX 2017-2020. Data analysis used multiple linear regression. Results showed PBV and BVPS had positive significant effect on stock prices. Partially ROE variable hasa negative effect on stock prices in banking companies on the IDX, but partially PBV and BVPS each have positive significant effect on stock prices. This research implies that PBV and BVPS can considered as one the determinants of stock prices, but ROE shows there is no effect on stock prices in banking companies on the IDX 2017-2020.
 Keywords: Profitability, Book Value Per Share, Price to Book Value, Stock Price, Banking Stocks.

Market reaction to the Russian Ukrainian war: a global analysis of the banking industry

PurposeThe purpose of this paper is to study the market reactions of the banking industry to the Russian–Ukraine war.Design/methodology/approachThis paper uses an event study methodology, regression analyses and interaction effects to study the effect of the war on banks stock prices and analyze factors that explain the cumulative abnormal return.FindingsFirst, this study finds a significant decline of almost 1.5% in return on the war date. Similar patterns were observed for all continents, but Europe had the most severe drop of about 4%. Second, after excluding the contemporaneous influence of the whole market using the market model, global bank equities returns fell by about 1% on the war date, indicating that bank stocks were more severely impacted by the war than the average stock market. Net-of-market return approach further reveals that bank stock prices decreased 1.4% more on the event day compared to the prewar market average. Third, the impacts of the war and sanctions were persistent when the war continued. Banks stocks were most hit in Europe, Asia and North America.Originality/valueThis paper pioneers the study of the effect of the Russia–Ukraine war on the banking industry. This paper also analyzes the reaction pattern of bank stocks before, during and after the war to explain the behavior and expectations of investors toward the war.

Financial Inclusion and Markets

The period 2015–2020 has seen major events Indian banking history. The period saw high levels of Non-Performing Assets (NPAs), bank mergers as well as enormous thrust of financial inclusion. In this article we explore how the stock prices of banks react financial inclusion as more bank accounts are opened under the financial inclusion mandate. The study has two distinct parts. In the first part, an analytical summary of Indian banking is presented. The study then considers financial inclusion data from Pradhan Mantri Jan Dhan Yojana (PMJDY) intervention. the financial inclusion data. We consider the data involving 34 banks covering the period January 2015-March 2020. Our sample has 23 public sector banks and 11 private banks. Monthly data for these banks were obtained for share prices, number of PMJDY beneficiaries, deposits in the accounts, Rupay cards, payments made at POS, mobile payments. Thereafter we use panel regression technique to establish the relationship between financial inclusion and banking stocks. We find that, banking returns decrease as bank sizes increase or NPAs mount. Our results also establish a positive relationship between financial inclusion and share price. While the evidence of financial inclusion affecting stock prices is weak, it does establish that growth in payment instruments do have positive effects. We also find a positive relationship between financial inclusion and cashless payments. However, we do not find a strong evidence of the market rewarding cashless payments. We also find that as number of cashless instruments (cards) and the payments in such accounts increase, more and more individuals make cashless payments. This once again highlights the importance of payments into the accounts of the beneficiary. Our findings suggest that while the market doesn’t reward how many new beneficiaries are added, it does reward the banks if the newly opened accounts attract deposits. This certainly augurs well as financial inclusion must play an integral part of the Indian financial system. Most importantly, our study suggests that new accounts must see deposits for the financial system to be rewarded. We also find that the market may not reward bank consolidation and hence any further consolidation may have to be relooked at.

How Low Can Regional Bank Stock Prices Fall?

How Low Can Regional Bank Stock Prices Fall?

Can money supply endogeneity influence bank stock returns? A case study of South Asian economies.

This study tests the Post-Keynesian theory regarding bank stock returns and money supply endogeneity in the context of South Asian countries. This study uses panel data set from different sources over twenty-eight (28) years. The research uses different econometric techniques before switching to the generalized method of moments (GMM). The empirical results indicate a significant positive effect of net interest rate margins on bank loans in South Asian countries, whereas a positive relationship exists between foreign to local interest rates and the money supply. The findings depict that positive associations exist between inflation and money supply of banks, and between the money supply and bank stock returns. More specifically, the GMM results show that the money supply has positively affected the stock prices of banks suggesting strong policies for the stakeholders of these economies for the sake of economic growth and sustainable development.

Bank ownership concentration and stock price informativeness: International evidence

AbstractThis paper examines the relation between ownership concentration and stock price informativeness around the world. Using a sample of banks from 59 countries between 2002 and 2019, we find robust evidence from a linear model supporting the entrenchment effect. However, the nonlinear model shows that the effect of control rights on the informativeness of stock prices forms a U‐shaped curve. We also document that banks with controlling shareholders have more volatility in the information content of bank stock prices in a poor regulatory environment or developing countries.

Capturing the impact of accounting and regulatory variables on stock prices of banks – an empirical study of Indian banks in panel data modeling

PurposeAnalysts expect reduced bank earnings as a result of the impact of the increase in bad loans. Banks have strategically created high provision coverage ratios allocating large funds for possible deterioration in asset quality. Given the expected faster growth and recovery in the bank lending sector, investors have always been interested in banking stocks, despite the waves of non-performing assets (NPAs) and recessionary influences. Historical references reiterate that the banking stocks have been better performers in their returns compared to the capital markets.Design/methodology/approachThe study aims to examine the impact of key accounting variables on the stock prices of Indian banks in the panel data framework.FindingsThe current study explores the impact of accounting variables on the market prices of shares. After the study, it may be concluded that earning per share (EPS), return on equity (ROE), capital adequacy ratio (CAR) and net interest margin (NIM) have an incremental impact on the prices of banking stocks, and the current ratio (CR) and NPAs have a detrimental impact on them.Practical implicationsStudying their impact on stock prices is the most convenient fundamental analysis that could be conducted on the stock prices of the banks.Originality/valueTo provide insights into the association of the accounting and regulatory variables there is a severe limitation in the quantity of the literature available. This study has attempted to build a relationship between the accounting and regulatory variables and the stock prices of banking stocks, to help investors with some reliable methods to estimate the stock prices in the future.

The Effect of Financial Ratio on Stock Price of Banks Listed on the Indonesia Stock Exchange (IDX)

This study aims to analyze the effect of financial ratios on stock prices ­of banks listed on the IDX, how _they influence _return on assets (ROA), debt -equity ratio (DER), price book value (PBV), and net profit margin (NPM)­. This research method uses the descriptive method. The unit of analysis is the banking companies listed on the Indonesia Stock Exchange (IDX). The research sample is 50 bank companies. The analytical method used in this study is multiple linear regression method. The results showed that partially PBV has a positive effect on stock prices, while ROA has no positive effect. DER has no negative effect on stock prices, and NPM has no positive effect on stock prices. Simultaneously ROA, DER, PBV, and NPM affect stock prices at banks listed on the Indonesia Stock Exchange. The limitations of this study are the limitations of the processed data and the variables used. This study ­would be helpful to the equity investment community, as material consideration for investing in companies.

Are monetary policy shocks causal to bank health? Evidence from the euro area

Despite considerable efforts of the European Central Bank (ECB) to support bank intermediation after the 2008 financial crisis, the recovery of euro area banks remained incomplete. Although many studies indicate that central banks can influence the stock prices of firms through their policy actions and communication, a knowledge gap exists as to whether the ECB's monetary policy can influence bank health. Through a high-frequency identification approach, this study reveals that the causal effect of conventional monetary policy action and communication by the ECB on bank stock prices differed over time, whereas its influence on bank financing costs was robust. This study provides new evidence showing that information effects related to policy easing surprises in the aftermath of the 2008 financial crisis hampered the ECB efforts to improve bank health and that its Odyssean communication signals (related to forward-looking announcements of policy easing) supported bank health during this phase. Local projections suggest that the response of banks to monetary policy shocks displayed some persistence, where ECB policy surprises and communications that shifted up (down) the yield curve were normally positive (negative) for bank health. The findings solicit a new perspective when assessing the influence of the ECB's monetary policy measures on euro area banks.

Dampak Covid 19 Terhadap Perubahan Harga Saham Perbankan di Indonesia Sebelum dan Saat Pandemi

Abstract: Purpose: Aims of this research to examine the differences among internal and external factors that affect stock prices before and during the Covid-19 pandemic. Methodology: Research methods uses a quantitative approach method, obtained as many as 18 banks registered at IDX for 2016-2021. Data were processed using the Wilxocon sign test and the paired sample t test using SPSS software. Results: The results show a significant difference, during a pandemic ROA decreased by 1.3%, ROE decreased by 1.91%. Hypothesis testing using paired sample t test on the DER, exchange rate, and interest rates variables show significant differences before and during the Covid-19 pandemic. During the pandemic, DER increased by 0.03%, the exchange rate decreased by 0.02%, and interest rates decreased by 0.13%. Limitations: This research found that there was an influence on banking stock prices before and during the pandemic, as well as significant differences in stock prices. This research is also limited by using a sample of 19 companies in the banking sector that are listed on the IDX. Contribution: This research is expected to be input for banks in managing stocks properly and considering the Covid-19 pandemic. Research contribution to the field of science through the management of stock prices before and during the pandemic. Keywords: 1. ROA 2. ROE 3. DER 4. Rupiah Exchange Rate 5. Interest Rate 6. Stock Price

NLP-Based Application for Analyzing Private and Public Banks Stocks Reaction to News Events in the Indian Stock Exchange

This is an effort to analyze the reaction of stock prices of Indian public and private banks listed in NSE and BSE to the announcement of seven best case news events. Several recent studies have analyzed the correlation between stock prices and news announcements; however, there is no evidence on how private and public sector Indian bank stocks react to important news events independently. We examine these features by concentrating on a sample of banking and government news events. We classify these news events to create a group of negative and a group of positive tone of announcements (sentiments). The statistical results show that the negative banking news announcements had a one-month impact on private banks, with statistically significant negative mean CARs. However, with highly statistically substantial negative mean CARs, the influence of the negative banking news announcements on public banks was observed for two months after the news was published. Furthermore, the influence of the positive banking news on private banks persisted a month after the news was published. Positive banking news events had an influence on public banks for five days after they were published. The study concludes that public bank stocks react more to negative news announcements than positive news announcements in the same manner as the sentimental polarity of the news announcements as compared to private bank stocks. First, we retrieved the news articles published in prominent online financial news portals between 2017 and 2020, and the seven major news events were extracted and classified using multi-class text classification. The Random Forest classifier produced a significant accuracy of 94% with pre-trained embeddings of DistilBERT, a neural network model, which outperformed the traditional feature representation technique, TF-IDF. The training data for the classifier were balanced using the SMOTE sampling technique.

THE EFFECT OF PROFITABILITY RATIOS ON SHARE PRICES OF PERSERO COMMERCIAL BANKS IN INDONESIA FOR PERIOD 2017-2021

This study aims to measure the effect of the variables Return On Asset (ROA), Return On Equity (ROE), Net Profit Margin (NPM) on the Stock Price of Persero Commercial Banks in Indonesia in 2017-2021. The number of samples consists of 4 banks obtained using the total sampling technique. The data used is secondary data obtained from the Quarterly Financial Statements published on the official website of PT Bank Negara Indonesia (Persero) Tbk, PT Bank Mandiri (Persero) Tbk, PT Bank Rakyat Indonesia (Persero) Tbk, and PT Bank Tabungan Negara (Persero) Tbk during of the period 2017-2021. The data analysis model used is multiple linear regression analysis using SPSS 25.00 software. In contrast, hypothesis testing uses data analysis techniques, namely the coefficient of determination (Adjusted R2), F test and t-test. Based on the results of the coefficient of determination test (Adjusted R2), it shows that Return On Assets (ROA), Return On Equity (ROE), and Net Profit Margin (NPM) contribute an influence of 0.36 or 36% to the stock price. In comparison, 0.64 or 64% is explained by other variables outside the research model. F-test results show that Return On Assets (ROA), Return On Equity (ROE), and Net Profit Margin (NPM) simultaneously have a significant effect on stock prices. Based on the results of the t-test shows that the variables Return On Assets (ROA), Return On Equity (ROE), Net Profit Margin (NPM) partially have a significant effect on the Share Price at Persero Commercial Banks in Indonesia for the period 2017-2021.

Monetary policy effects in times of negative interest rates: What do bank stock prices tell us?

This paper investigates bank stock performance following different monetary policy actions in times of positive and negative interest rates. Controlling for the broader stock market, monetary policy announcements that cause an unanticipated downward shift in the yield curve and a flattening of the shorter-end of the yield curve are found to persistently reduce bank stock prices once the interest rate environment is negative. Consistent with the deposits channel of monetary policy, the effects are larger and more persistent for banks that are relatively dependent on deposit funding. By contrast, a surprise movement in the slope of the longer-end of the yield curve does not impact bank stock prices in times of negative interest rates. Accounting data confirm that a parallel drop in the yield curve following a monetary policy decision in a negative interest rate environment hurts banks through shrinking deposit margins.

The Sensitivity of Islamic Banking Stock Prices During the Pandemic Covid-19

Economic growth has contracted due to the COVID-19 pandemic. Based on the history of previous economic and financial crises, the banking sector is one of the most sensitive sectors during a crisis. Investors consider these conditions for their investment decisions. This paper aims to find the factors that determine the stock price of Islamic banking on three observation variables: profit, debt equity ratio (DER), and cash flow from operating (CFO). This study used a quantitative approach with secondary data sources from financial statements and company stock prices. The sample was selected purposively from Islamic banking stocks listed on the Indonesian Sharia Stock Index (ISSI). Data analysis used panel data regression using the E-Views 10 application. The findings of this study are that earnings and DER significantly determine the share price of Islamic banking based on a partial test. Profit has a positive effect, while DER has a negative impact. These findings illustrate that expectations for investment in Islamic banking stocks remained stable during the pandemic. The company's fundamental factors determine the demand for Islamic bank shares.

Factors Influencing The Stock Price of Nepalese Commercial Banks

The purpose of this research is to examine the impact of factors influencing the stock price of Nepalese commercial banks. This research uses MPS as the dependent variable and independent variables are DPS, EPS, P/E ratio, ROA, GDP, and inflation rate. The secondary data has been collected from the annual reports of selected commercial banks for five year study period from 2017 to 2021. Descriptive and causal-comparative research design has been used to analyze and interpret this data using SPSS 23 version. Ten commercial banks are taken as a sample out of 27 banks. The convenience sampling method is used. Multiple linear regression models have been used to show the impact of independent variables on the dependent variable. The result shows that there is a positive and statistically significant effect of DPS, EPS, and P/E ratio on the stock price. ROA and GDP have a positive but not significant effect on the stock price but the inflation rate has a negative and insignificant impact on the stock price.